Legal Tyranny

Legalized tyranny

Laws and dubious accounting practices have given the multinationals and super rich the ability to avoid taxes by setting up off-shore subsidiaries through which they divert their profits. This legal practice has deprived states of much-needed income to finance their government programs, caused unfair competition with national businesses who pay their share of taxes, and limited capital available for business expansion.

Because of these tax avoidance schemes, states resort to taxing their citizens at higher and higher levels to offset the taxes avoided by their multinationals and super rich. Citizens are tyrannized by the human-made laws of their politicians that are legal, but clearly illogical, immoral, and unethical. According to a Bloomberg Survey dated March 5, 2015, in the previous year, U.S. companies seeking to avoid high corporate tax rates stockpiled an additional $154.5 billion overseas, bringing the grand total to more than $2 trillion. (1)

In 2012, Richard Murphy, a tax expert and founder of the Tax Justice Network produced a report noting that tax evasion and tax avoidance might cost the governments of the European Union member states 1 trillion Euros a year. The Tax Justice Network estimated that by 2010, in offshore tax havens alone, some $21 to $32 trillion dollars were hidden away (2). None of these practices can be deemed just or virtuous by any standard. Indeed, most citizens today consider them totally unfair and oppressive. It’s tyranny by the state against its citizens; it undermines democracy and impoverishes the citizenry.

In report dated 27 March, 2017, “Opening the Vaults” by Oxfam, an international confederation working to end the injustices that cause poverty, Manon Aubry, Oxfam’s Senior Tax Justice Advocacy Officer said: 

All companies and individuals have a responsibility to pay their fair share of tax.  Tax dodging deprives countries throughout Europe and the developing world of the money they need to pay for doctors, teachers and care workers.

The focus of this report discusses Europe’s 20 biggest banks.  These banks are registering over a quarter of their profits in tax havens well out of proportion to the level of real economic activity that occurs there.  A new EU transparency rule requires European banks to publish information on the profits they make and the tax they pay in every country they operate.  The report finds tax havens account for 26 percent of the profits made by the 20 biggest European banks an estimated 25 billion euros. And in 2015 European banks posted at least 628 million euros in profits in tax havens where they employ no one.  French bank BNP Paribas made 134 million tax-free profit in Cayman Islands despite having no staff based there.

Furthermore, Germany’s Deutsche Bank registered low profits or losses in many major markets in 2015 while booking almost 2 billion euros in profits in tax havens. And in Luxembourg and Ireland we find the most favored tax havens, accounting for 29 percent of the profits banks posted in tax havens in 2015.  The 20 biggest banks posted 4.9 billion euros in profit in the tax haven of Luxembourg in 2015—more than they did in the UK, Sweden and Germany combined.

References:

[1] Richard Rubin, “U.S. Companies Are Stashing $2.1 Trillion to Avoid Taxes.” <http://www.bloomberg.com/news/articles/2015-03-04/u-s-companies-are-stashing-2-1-trillion-overseas-to-avoid-taxes?cmpid=BBD030415&alcmpid=>.

[2] Richard Murphy, “The EU Tax Gap: New Evidence Shows There Is €1 trillion of Lost Revenue to Target to Save Our Futures from Despair.” Tax Research UK Blog. <www.taxresearch.org.uk/Blog/2012/02/29/the-eu-tax-gap-new-evidence-shows-there-is-e1-trillion-of-lost-revenue-to-target-to-save-our-futures-from-despair/>.

You may contact Francesca at: francesca@francescadebardin.com

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